Tenants read / New government package for rental market

According to Tejarat News, the Minister of Roads and Urban Development recently wrote on Twitter: Tenants are waiting for the government package for the market. Rent To be. It remains to be seen whether the decision, which is said to be made in collaboration with the president and experts, will bring tenants out of the rent crisis.

fellow-citizen He wrote that the information recently published by the deputy of the price fluctuations in the rental and housing market, as well as the inflation index, shows a trend of these three indicators, which makes it difficult to improve the relations of the rental market.

This significant change in the P / R index indicates a decrease in the return on rental property due to the jump in housing prices. However, a review of the 10-year trend of housing price, rent and inflation indices shows that the correction of the P / R index should not and can not be achieved by raising the rent index, but requires serious reform in housing market relations, its removal from the list of capital goods and price jumps. It is baseless.

Housing and rental behavior with inflation

Although housing market price fluctuations are always attributed to rising inflation and the meaning of increasing its price is reduced to maintaining the purchasing power of rial capital of investors, statistics show that the range of rial investment in the housing market reaches 1.6 times the growth rate of inflation. .

The importance of this point starts from the market index Rent Should also be examined alongside inflation and housing indicators.

According to official statistics, the rental price index has grown by 880% from the beginning of the 90s to the end of May this year, from 100 units to 980 units, and compared to the trend of the housing index, it has followed the consumer inflation rate much more reasonably.

Accordingly, in order to continue the long-term trend of housing, rent and inflation indicators, the housing market must be reformed and this market must return to the previous trend.

As can be seen in the chart published in this report, the housing price trend in Tehran has changed since mid-2017 and has peaked with a much steeper slope than rent and inflation indicators.

While the previous trend of rental market indices and consumer inflation has continued and its volatility has been small.

Needs to get out of the rent crisis

The details provided by the Deputy Minister of Roads and Urban Development regarding the housing rent management package indicate that the second package has been compiled in three general sections, the first of which is related to intensifying the supply of vacant houses to the housing market and the second is to increase production in the form of projects. Housing support.

Also, the third step in this package is market control, which can be done in part with government approvals, and its proposals will be presented at Sunday’s government meeting. The second part of this issue is related to the laws required to control the market, which will be discussed at the summit today and its approvals will be received shortly.

The new government package to get out of the rent crisis on any basis, as a first step, must have a solution to change the behavior of the housing market and the consumption of this essential commodity.

To achieve this goal, it is possible to change the urban land law, equip the real estate database, implement the real estate tax law, and implement the housing income tax law, but the precondition for all these possible measures is the foundation of the economy. Get out of the current inflation and sanctions situation.

If the new government policy package is successful in implementing the first step, the second step is to change landlord-tenant relations as in developed countries to both reduce rental costs by extending the term of the contract and to implement government protectionist policies in the area of ​​leasing. Encourage landlords and subsidize low-income tenants.

Of course, this issue requires the cooperation of the three forces and the amendment of the existing laws in the field of property. Meanwhile, launching professional rental companies can vacuum the presence of a competitor in the market. Rent Break the tradition and open the government’s hand in reforming the rental market relations without changing the landlord-tenant relationship and property laws, but the size of the urban rental market in Iran is so large that these companies are not able to have a major impact except in special cases and the government is inevitable Take the first and second steps to exit the rental crisis.

In the next steps, it is necessary to organize the rental market and regulate the relations of this market, like other sectors of the economy, by creating responsible institutions.

To implement this structure in the rental market, the government must also amend some of the rules of the real estate consultants’ union and make real estate companies one of the three responsible parties in rental contracts.
In this triangle, the tenant does not violate the rules of the market for personal gain, the landlord adheres to the rules of the market through the rules of rental market organizations, as well as the costs of violation, and the real estate consultant will act in accordance with the law.

Other policies that are likely to be addressed in the new government package and addressed with a specialized approach are the protection of low-income tenants through the payment of housing deposit facilities; But this will only be a preliminary policy, and more than ever, the policymaker will focus on housekeeping these families in the National Housing Movement.